Selling a Freehold Flat: Mortgage Issues, Buyer Concerns and What to Expect

Most flats in England and Wales are sold on a leasehold basis. The leaseholder owns the right to occupy the flat for a fixed term, while the freeholder owns the building and the land. This arrangement creates a legal framework — the lease — that sets out how the building is maintained, who pays for repairs, and how insurance is managed.

A freehold flat sits outside this framework. The owner holds the freehold title to their individual unit, with no lease and often no formal arrangement for shared building costs. This might sound like a benefit — no ground rent, no lease to expire, no freeholder to deal with — but in practice, it creates serious complications when you come to sell. This guide explains why freehold flats are problematic, what your options are, and how to achieve the best possible outcome.

What is a freehold flat?

A freehold flat is a flat where the owner holds the freehold title directly, rather than a lease granted by a freeholder. Unlike a leasehold flat, there is no lease document setting out the terms of occupation, no ground rent, and no fixed term. The owner's name appears on the freehold register at HM Land Registry as the proprietor of the flat itself.

This arrangement is uncommon. HM Land Registry records show that the overwhelming majority of registered flats in England and Wales are held on a leasehold basis. Freehold flats are most often found in:

• Older converted properties. Victorian and Edwardian houses divided into flats decades ago, before formal leasehold structures became standard practice for conversions.
• Small two-flat conversions. Properties where the building was split between an upstairs and downstairs flat, often by family members, without legal advice on the most appropriate ownership structure.
• Properties with historical title issues. Some flats ended up as freehold through informal arrangements, adverse possession claims, or errors in the original conveyancing.

Freehold flat vs leasehold flat vs share of freehold

Understanding the distinction between these three ownership types is essential, because each has very different implications for mortgageability and saleability.

The key problem with a freehold flat is the absence of a maintenance and insurance framework. When you sell a leasehold flat, the lease provides legally enforceable obligations for all flat owners. With a freehold flat, there is no equivalent mechanism unless a separate agreement has been created.

Why mortgage lenders are reluctant

The mortgage issue is the single biggest obstacle when selling a freehold flat. The UK Finance Lenders' Handbook, which sets out the requirements that solicitors must verify before a lender will release mortgage funds, flags freehold flats as properties requiring special consideration.

Lenders are concerned about three specific risks:

1. No enforceable repair obligations. If the roof leaks or the exterior walls need repointing, there is no legal mechanism to compel the other flat owner or owners to contribute to the repair costs. The building could deteriorate, reducing the value of the lender's security.
2. No mandatory buildings insurance. Without a lease, there is no obligation for the building to be insured at full rebuild value. If the building is destroyed or seriously damaged and there is inadequate insurance, the lender could lose its security entirely.
3. Uncertain enforceability of covenants. Even where a deed of covenant exists between flat owners, positive covenants (obligations to do something, such as contribute to repairs) do not automatically bind successors in title under English law. This means future owners may not be legally obliged to honour the agreement.

The practical consequence is that most high street banks and building societies — including the largest lenders in the UK — will decline a mortgage application for a freehold flat. Some specialist lenders may consider the application if certain conditions are met, but the pool of available mortgages is severely restricted.

Impact on sale price and buyer pool

The mortgage restriction directly affects both the price you can achieve and the number of potential buyers. When marketing a freehold flat, you should expect:

• A smaller buyer pool. With most mortgage products unavailable, your market is largely limited to cash buyers, investors, and the small number of buyers who can secure specialist finance. This reduces competition and, in turn, the final sale price.
• A price discount. Freehold flats typically sell for 10% to 30% less than equivalent leasehold or share of freehold flats, depending on the local market and whether any covenants or management agreements are in place.
• Longer marketing times. Finding a cash buyer or a buyer with specialist finance takes longer than selling to the general market. Estate agents may advise a lower asking price to compensate.

For a broader look at the costs involved in selling a flat, see our guide on the cost of selling a leasehold flat, which covers many of the standard conveyancing expenses that also apply to freehold flat sales.

Options for selling a freehold flat

If you own a freehold flat and want to sell, you have several possible approaches. The right one depends on your timeline, your relationship with the other flat owners in the building, and how much you are willing to invest before marketing.

Option 1: Sell to a cash buyer as-is

The simplest approach is to sell the flat as a freehold to a cash buyer. No structural changes to the ownership are needed, and the conveyancing is straightforward. The trade-off is price: you will almost certainly achieve less than the flat would be worth as a leasehold or share of freehold property. This option suits sellers who need to sell quickly and are willing to accept a lower price.

Option 2: Create a leasehold structure

The most effective way to maximise your sale price is to convert the freehold flat into a standard leasehold or share of freehold arrangement before selling. This involves:

1. All flat owners in the building agreeing to the arrangement.
2. Creating a freehold company in which all flat owners hold shares.
3. Granting long leases (typically 999 years at a peppercorn ground rent) on each flat.
4. Registering the new leases and the freehold company at HM Land Registry.

Once complete, each flat is held on a standard long lease with share of freehold — the ownership structure that mortgage lenders prefer. The cost of this process varies but is typically £1,500 to £4,000 per flat in legal fees, depending on the complexity and the number of units in the building. The increase in sale price usually far exceeds this cost.

Option 3: Establish a deed of covenant

If converting to leasehold is not possible (for example, if one of the other flat owners refuses to cooperate), you can establish a deed of covenant between all flat owners. This is a legal agreement setting out maintenance responsibilities, insurance obligations, and contributions to shared costs.

A deed of covenant is less robust than a lease, but it may be sufficient to satisfy some specialist lenders. The cost is lower than a full leasehold conversion — typically £500 to £1,500 in legal fees — but it does not solve the fundamental problem that positive covenants are difficult to enforce against future owners under English property law.

Option 4: Convert to commonhold

Commonhold is a freehold ownership structure specifically designed for multi-unit buildings. Introduced by the Commonhold and Leasehold Reform Act 2002, it gives each flat owner freehold title to their unit while creating a commonhold association to manage the building. In theory, it is the ideal solution for a building with freehold flats. In practice, commonhold remains extremely rare in England and Wales, and many mortgage lenders are unfamiliar with it. This option is worth discussing with your solicitor but may not improve mortgageability in the short term.

Conveyancing for a freehold flat sale

The conveyancing process for selling a freehold flat is simpler than for a leasehold flat in some respects — there is no management pack to order, no TA7 form to complete, and no lease length to worry about. However, the unusual nature of the title means your solicitor will need to address specific issues that do not arise in a standard sale.

Key conveyancing considerations include:

• Title review. Your solicitor will need to confirm the exact extent of the freehold title, including any rights of access over common parts, shared drains, and boundaries between the flats.
• TA6 form. You will still need to complete the standard Property Information Form. Any maintenance arrangements, shared costs, or disputes with other flat owners should be disclosed here.
• Property searches. The buyer's solicitor will carry out the standard suite of property searches. These are the same as for any other property sale, though the results may prompt additional questions about the building's structure and shared arrangements.
• Existing covenants and agreements. If a deed of covenant or any informal maintenance agreement exists, your solicitor should provide copies to the buyer's solicitor as part of the draft contract pack.
• Buildings insurance. The buyer (or their lender, if applicable) will want confirmation that buildings insurance is in place for the whole building. If there is no formal arrangement, this can be a significant sticking point.

For a full breakdown of what conveyancing typically costs, see our conveyancing costs breakdown guide.

What the buyer's solicitor will ask

Even with a cash buyer, the buyer's solicitor will raise specific enquiries related to the freehold flat structure. Expect questions about:

• How maintenance of the building's structure, roof, exterior walls, and common areas is managed and funded
• Whether buildings insurance covers the entire building and who is responsible for arranging it
• Whether there are any written agreements between the flat owners regarding shared costs
• What rights of access exist over shared areas such as hallways, staircases, and gardens
• Whether any disputes have arisen with the other flat owners over maintenance, costs, or use of the building
• Whether the property has the benefit of any restrictive covenants that protect its value or use

Preparing clear, honest answers to these enquiries before they are raised will speed up the transaction. Any evasion or inconsistency will slow the process or may cause the buyer to withdraw.

Converting before you sell: a step-by-step overview

If you decide to convert your freehold flat to a leasehold or share of freehold structure before selling, here is what the process typically involves:

1. Get all flat owners on board. Every owner in the building must agree to the conversion. If anyone refuses, the process cannot proceed.
2. Instruct a solicitor. You need a solicitor with experience in freehold-to-leasehold conversions. This is a specialist area and not all conveyancers handle it regularly.
3. Set up the freehold company. A company is registered at Companies House, with each flat owner as a shareholder and director. This company will hold the freehold of the building.
4. Draft the leases. The solicitor drafts a long lease (usually 999 years at a peppercorn ground rent) for each flat. The lease sets out maintenance obligations, insurance requirements, and service charge provisions.
5. Transfer the freehold. Each flat owner transfers their freehold title to the company and is granted a lease in return. The company is registered as the freeholder at HM Land Registry.
6. Register the leases. Each new lease is registered at HM Land Registry. The Land Registry fee is based on the value of the property.

The entire process typically takes three to six months and costs £1,500 to £4,000 per flat in legal fees, plus HM Land Registry fees and Companies House registration. The resulting increase in property value and mortgage availability usually makes this a worthwhile investment.

Practical tips for selling a freehold flat

1. Take legal advice early. Before you market the property, consult a solicitor about your options. A short conversation can save months of wasted effort if the title structure needs to be changed.
2. Be upfront with your estate agent. Make sure your agent understands the freehold flat status and can set buyer expectations accordingly. Misleading marketing will lead to aborted sales when the buyer's solicitor discovers the title structure.
3. Gather all documentation. Collect any existing deeds of covenant, maintenance agreements, insurance policies, and records of shared cost contributions. Having these ready for the buyer's solicitor speeds up the process.
4. Consider the conversion investment. If the estimated cost of converting to share of freehold is £2,000 to £3,000, but the expected price increase is £20,000 or more, the financial case is clear.
5. Target the right buyers. If you are selling as-is, focus your marketing on cash buyers and investors. They understand the title structure and will not be deterred by mortgage restrictions.

Sources

• HM Land Registry — Practice Guide 28: Freehold Flats (gov.uk)
• UK Finance Lenders' Handbook — ukfinance.org.uk
• Commonhold and Leasehold Reform Act 2002 — legislation.gov.uk
• Law Commission — Reinvigorating Commonhold: The Alternative to Leasehold Ownership (Law Com No 394, 2020)
• RICS — Valuation of Individual New-Build Homes (2019)
• Leasehold and Freehold Reform Act 2024 — legislation.gov.uk
• Law Society Conveyancing Protocol, 5th edition — lawsociety.org.uk
• GOV.UK — Leasehold Reform (Ground Rent) Act 2022

Frequently asked questions